RHB top gainer, CIMB and MBSB among top active

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The enlarged banking group will have combined assets valued at RM613 billion, displacing Malayan Banking Bhd’s number one ranking in Malaysia by total assets with total assets of RM578 billion to become Malaysia’s largest banking entity, ranking it just after the three Singapore banks.

KUCHING: RHB Capital Bhd (RHB) emerged as the top gainer on Bursa Malaysia yesterday, while shares of CIMB Holdings Bhd (CIMB) and Malaysian Building Society Bhd (MBSB) were among the most actively traded following the announcement of a tripartite-merger in the making.

RHB Capital rose 46 sen to RM9.18 at close yesterday. It reached a high of RM9.70 during trade yesterday with more than 10.78 million shares traded, making it the top gainer. Meanwhile, MBSB rose 12 sen or 5.13 per cent at closing with 29.8 million shares traded, while CIMB dropped 24 sen or 3.31 per cent with 34.9 million shares changing hands.

Late Thursday, CIMB Group, RHB Capital and MBSB announced the approval from Bank Negara Malaysia to commence discussions with the aim of merging the businesses of both RHB and CIMB as well as creating an enlarged Islamic banking franchise with MBSB.

The enlarged banking group would have combined assets valued at RM613 billion, displacing Malayan Banking Bhd’s number one ranking in Malaysia by total assets)with total assets of RM578 billion to become Malaysia’s largest banking entity, ranking it just after the three Singapore banks.

All three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger of the three entities.

As no further details were provided in the announcement, analysts speculate that CIMB could be taking the lead and undertaking a simultaneous share swap to acquire RHB Cap and MBSB.

“We think the entire deal will be funded via the issuance of new CIMB shares given the need to conserve capital ahead of tighter capital requirements ahead,” suggested TA Securities Holdings Bhd.

Analysts Lim Sue Lin and Hon Seow Mee from AllianceDBS Research Sdn Bhd (AllianceDBS Research) said the creation of a mega Islamic bank came as a surprise.

“The RHB Capital-MBSB merger has long been speculated, and CIMB’s move to acquire RHB Capital is also not new,” they explained.

“The transaction was last contemplated in May 2011. The deal fell through because of pricing.

“However, the creation of a mega Islamic bank is a surprise as we had expected BIMB Holdings Bhd (BIMB) to lead that move. Merging CIMB and RHB Capital’s Islamic banking assets and MBSB would turn the entity into the second largest Islamic bank by total assets, after Maybank Islamic.

“We would not discount this enlarged syariah compliant unit being listed, or even BIMB or Bank Muamalat Malaysia Bhd – currently owned by DRB-Hicom Bhd – to be added to the equation.”